Ky. Rev. Stat. ch. 324 § 324.111
Escrow account of broker -- Interest -- Audit -- Contract deposit release --
Operative Text
324.111 Escrow account of broker -- Interest -- Audit -- Contract deposit release -- Separate property management accounts. (1) A principal broker shall maintain an escrow account or accounts, separate from the individual or office account, in which all contract deposits and money belonging to others shall be deposited without unreasonable delay. The escrow accounts shall be maintained within the State of Kentucky and shall be identified to the commission in writing. Each principal broker shall advise the commission, in writing, if any overdraft occurs in the escrow account for any reason other than service charges instituted by the bank, and which is not corrected within seventy-two (72) hours of the broker receiving notice. (2) The broker may place the deposit in an interest-bearing account or instrument. The interest earned shall accrue to the person agreed to in writing by all parties. (3) No checks shall be drawn against uncollected deposits in the escrow account. (4) None of the contract deposits shall be withdrawn until the contract has been terminated by performance, by agreement in writing between all parties, or by order of a court of competent jurisdiction, except as permitted in subsection (6) of this section. (5) Upon licensure and each renewal, the principal broker shall sign a permit giving the commission the permission to audit all his or her escrow accounts. (6) Upon being notified that one (1) or more parties to a contract intends not to perform, the broker may initiate the release process. The release process shall require the broker to notify all parties at their last known address by certified mail that the contract deposit shall be distributed to the parties specified in the letter unless all parties enter into a written mutual release, or unless one (1) or more of the parties initiate litigation within sixty (60) days of the mailing date of the certified letter. If neither buyer nor seller initiates litigation or enters into a written release within sixty (60) days of the mailing date of the certified letter, the broker may release the deposit to the party identified in the certified letter without penalty under this section and without civil liability in the courts of the Commonwealth of Kentucky. (7) All principal brokers whose companies engage in property management shall maintain property management accounts separate from all other accounts or specifically indicate in all escrow records if funds are property management funds. (8) A broker or sales associate who owns rental property shall not be required to use the principal broker's management account for the rental property, unless required by the principal broker. (9) If any licensee is alleged to have committed an escrow account violation that warrants emergency action, the commission may conduct an emergency hearing as authorized by KRS 324.150(1)(b).
Kentucky Revised Statute § 324.111 establishes how licensed real estate brokers must handle money that belongs to clients and other parties. Principal brokers are required to keep escrow funds in dedicated, in-state accounts separate from their own business or personal funds, and those accounts are subject to audit by the Kentucky Real Estate Commission. Contract deposits held in escrow generally cannot be released until the underlying contract concludes through performance, mutual written agreement, or a court order — though a specific certified-mail process exists that can allow release after 60 days if no party initiates litigation or signs a written release. Overdrafts must be reported to the Commission if not corrected within 72 hours, and property management funds must be kept in their own separate accounts or clearly identified as such in escrow records.
Plain English — not legal advice.
Property owners who work with licensed brokers should understand that under Ky. Rev. Stat. § 324.111, any contract deposits or funds belonging to clients must be held in a dedicated escrow account maintained within Kentucky and registered with the Kentucky Real Estate Commission. Compliant principal brokers keep these funds strictly separate from operating accounts, avoid drawing checks against uncollected deposits, and promptly report any overdrafts that are not resolved within 72 hours. Brokers who manage rental properties maintain separate property management accounts — or clearly flag those funds in escrow records — and submit to Commission audits upon licensure and each renewal.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
As a renter or buyer, Ky. Rev. Stat. § 324.111 provides important protections for any deposit or earnest money you place with a licensed broker: those funds must be held in a dedicated escrow account and generally cannot be released without contract completion, a written mutual agreement among all parties, or a court order. If a dispute arises over a deposit, the broker may initiate a certified-mail release process, and you have up to 60 days from that mailing date to enter a written release or begin litigation before the broker may disburse the funds without penalty. If you believe a broker has mishandled escrow funds, the Kentucky Real Estate Commission — which has authority under this section to conduct emergency hearings for serious violations — is one avenue to explore, and tenant-rights organizations can help you understand your options.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated October 19, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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Rules and statutes that cite this regulation